A look at startups that are making used luxury goods fashionable

Experts are not surprised to see a bunch of startups offering pre-owned luxury products, ranging from clothes to watches to accessories.Rajiv Singh | ET Bureau | December 03, 2016, 07:59 IST

It was a problem of plenty for Rashi Menda. The newly wed was swamped with loads of unused branded clothes and luxury bags, and the 27 year old was all at sea. But from the problem sprang a solution: creating a platform that will find new closets for coveted luxury, and make it accessible and affordable for women.

"We only use 20% of our closet 80% of the time. That's a ton of money and inventory just lying around," says Menda, who launched pre-owned luxury marketplace Zapyle in December last year. The journey so far has been nothing short of a fairy tale: the startup ships 15-20 products per day, with an average ticket size of Rs 12,500; counts Gucci, Tory Burch, Michael Kors, Louis Vuitton and Furla among top selling luxury brands; and hit a jackpot this Diwali: its three-day Diwali flash sale was equivalent to sales worth two regular months.

Rashi MendaFOUNDER, ZAPYLEDecember 2015

(Gucci, Tory Burch, Michael Kors, Louis Vuitton, Furla are top-selling luxury brands; Received angel investment from several HNIs in August this year; Ships over 15-20 products per day; average ticket size is Rs 12,500; Three-day Diwali flash sale was equivalent to that seen in two regular months)

"Indians love deeply discounted products, and when they are high quality and in mint condition, it's a great deal," she says.

Entrepreneurs like Menda are luring millions of Indians who yearn for a piece of 'luxury' to satiate their aspirational quotient, even if that means buying preowned or used products. Who cares, snaps Menda, whether it's first-hand or pre-owned. "Luxury is a luxury." It's about the quality of the product and the experience that comes with it. So being discounted doesn’t change the pleasure of indulging in it, she adds.

Ask Menda the maths behind the business and she avers it's a no-brainer: On the supply side, millions of Indian women, she reckons, stock their closets with stuff worth over $1 billion every year, and still have nothing to wear. Nearly a third of their closet is never worn, and another third is worn once or twice at the most. And on the demand side, there's a big chunk of population who doesn't want to pay full price for luxury. But they know its value and don't mind spending that much, she says.

Experts are not surprised to see a bunch of startups offering pre-owned luxury products, ranging from clothes to watches to accessories.

"Pre-owned luxury market is democratising luxury by making it affordable," says Abhay Gupta, founder of Luxury Connect & Luxury Connect Business School. And, the market, he predicts, is set to boom. Reason: The stigma attached to buying a used luxury product has faded.

The attractiveness of having a luxury product, he explains, far supersedes the negative emotion of it being a second-hand one. While earlier the big-ticket prices kept away quite 'aspiring' but highly 'stylish' and 'wannabe' consumers away, the pre-owned market has made luxury within their reach. "There is ahuge untapped market."

(Zara, Mango, Vero Moda, Forever 21, and AND are top-selling brands; charges 10% commission on each sale; has raised seed funding; sells up to 500 items per day; average ticket size is Rs 600; saw 50% more traffic this Diwali)

No wonder, entrepreneurs see gold at the bottom of the luxury pyramid.

Anvita Mehra is one of them. "Indians are coming out of the closet," says Mehra, the 25-year-old cofounder of pre-owned luxury marketplace Confidential Couture. People have understood that luxury can be recycled and the customer is gaining even when he is buying and selling the product, she says.

Started in June 2014, Confidential Couture sells 90 items per month with an average ticket size of Rs 25,000, and counts Louis Vuitton, Gucci, Michael Kors and Fendi among its top-selling luxury brands. It categorises all the products under three heads — never been used, gently used and fairly used — and fixes discounts accordingly. So while a 'never been used' product can get you a discount up to 30%, 'gently used' ones carry 60% off tag, and 'fairly used' can be yours for as low as 20% of the price. The idea, says Mehra, is to give consumers the actual impression of the product and make the buying- selling process very transparent.

For Mehra, the trigger for venturing into the pre-owned luxury segment was a personal experience. During her trip to Sloane Street in London, Mehra spotted a rare Louis Vuitton handbag which had a tag of £1,000. "It was prohibitively expensive," she recalls. But what startled her was the fact that the same bag was available on a pre-owned luxury portal in the UK at just half the price. "This inspired me to create a platform where people can experience the thrill of buying and selling luxury."

If Mehra is targeting 'aspirational' Indians, others are betting big on the mindset of millennial generation that believes in instant gratification. It's a generation that does not want to spend beyond a restricted limit for the 'branded latest range' but can do with a 'branded previous season product'. Owning one is the latest trend for this segment which can’t wait to save for the 'new' ones. CoutLoot, which raised an undisclosed funding in July this year, processes more than 80 orders per day at an average ticket size of Rs 750, and saw a 50% jump in Diwali sales. More people are inclined towards owing a pre-loved luxury product rather than buying first hand, says co-founder Jasmeet Thind.

Jasmeet ThindCOFOUNDER, COUTLOOTNovember 2015

(Processes over 80 orders per day at an average ticket size of Rs 750; raised undisclosed funding in July this year and saw 50% jump in Diwali sale)

There's an elaborate process before putting the products on sale, says Thind. Once the goods are received from the seller, fashion experts at CoutLoot authenticate the brand of the product based on more than 15 parameters such as stitch patterns, material and barcode numbers. After clearing the authenticity and quality check, experts take the picture of the product, propose a listing price to the seller based on the brand as well as the age, collection and the condition of the product, and help in framing buyer protection policies. Owning pre-owned products, says Thind, not only makes one look good on a small budget, but also gives freedom to switch styles more often.

What also helping the market grow, says Thind, is referrals. If the first experience is great for the buyer, she is definitely bound to refer the platform to her friends, which has created a big community of buyers and sellers.

And if you thought that pre-owned goods are confined just to luxury handbags and clothes, Gowtham U would help dispel such misconceptions.

Cofounder of It's My Time, a marketplace for luxury Swiss watches, Gowtham contends that a good branded watch never loses its sheen. In most cases, the watches are in good condition and sparingly used, which makes it difficult to identify whether it is used or not. Founded in May 2016, It's My Time sells over 20 watches every month, with an average ticket size of Rs 30,000-50,000; and counts Omega, Tag Heuer, Rolex, Rado and Panerai among its topselling brands.

The tantalising opportunity of making luxury affordable for millions is not without its own share of risks, though. And the biggest is the 'affordable' tag, say marketing and branding experts.

An aspirer for accessible luxury is perhaps looking to bask in the lure of luxury that makes him 'stand out' in a crowd, says Smitha Sarma Ranganathan, a marketing and branding consultant. Ironically, while luxury and democracy are conceptually perceived to be anti-thesis of each other, the market for pre-owned luxury products seems to be akin to seeking a shortcut to reach the 'promised land'.

"The day luxury gets perceived as being affordable, it may stop arousing the sensibilities of the primary market to seek products that make them seem larger than life," she says. Another challenge, she points out, is weeding out fakes. A country where people are gradually getting used to buying without the touch and feel factor, any instance of a fake luxury brand being peddled as genuine can act as a huge deterrent.

The entrepreneurs, for their part, are aware of the challenges. Menda of Zapyle is particular about weeding out fakes.

"Only when a product passes all the parameters from the rigorous list of checklist is that listed online," she says.

What about demonetisation? How has it impacted the business? Startups say it’s a blip in their growth story. "Things will be normal over the next few weeks," says Menda of Zapyle. "The business of fashion can never be out of fashion."